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What's "auto enrolment"?!

Latest research is predicting that the average first year cost of dealing with auto enrolment for small businesses of less than 50 employees will be around £8,900. 

What, you might ask, is auto enrolment and why, as a small business owner, should I have to pay for it?

Auto enrolment is the generic phrase used to describe the requirement, backed by legislation, for all employers in the UK to register employees into qualifying pension arrangements and to make employer contributions for each employee. Not all employees are affected: this depends on age and other factors, but most will be. The requirements are being phased in over several years, starting with the largest companies, who are already working under the new rules, and ending with the smallest employers who will be captured in 2014 and 2015.

However, the most important point to bear in mind is that all employers will be affected at some point in the next few years. If you are an employer, you should begin to think about the impact of the changes on your business, both in terms of coping with the new rules, which are quite complex, and also on the impact the additional costs will have on your business profits. If you have not already spoken to an independent financial adviser, you should do so as soon as possible, in order to understand what will be required of you. There may not be any specific action you need to take right now, but forward planning is crucial.

This article does not deal with the specifics of the legislation nor are we, as accountants and tax advisers, able to advise employers on implementation. If you would like to be put in touch with an independent financial adviser who is able to advise on this area, please do not hesitate to contact us.